Deck 1: Introduction

Question 1

David Ricardo's Theory of Comparative Advantage explains why countries that enjoy an absolute advantage in making certain goods can still prefer to purchase these products from other countries.

Answer 1

True

Question 2

World trade has grown about 10 percent per year since 1950.

Answer 2

False

Question 3

In 2007,the United States exported more goods than any other country in the world.

Answer 3

False

Question 4

Most trade today is more likely to be explained by the Theory of Comparative Advantage than by the Theory of Absolute Advantage.

Question 5

In 2007,the United States imported about 1.5 times more goods than it exported.

Question 6

A competitor offering a new product in a mature market can entice a company to start importing its own low-cost alternative.

Question 7

The Factor Endowment Theory was developed by Raymond Vernon.

Question 8

The term "outsourcing" refers to a strategy whereby a company purchases plants overseas.

Question 9

Many of the developing countries of the world experience traffic gridlock.

Question 10

The Treaty of Rome in 1957 was the first step in the creation of the European Union.

Question 11

The euro has replaced the currencies of all of the countries of the European Union.

Question 12

The "Wal-Mart effect" pushes manufacturers to sell products at ever-lower prices,often obtained by manufacturing abroad.

Question 13

The Bretton Woods Conference triggered the creation of the World Trade Organization in 1944.

Question 14

The North American Free Trade Association (NAFTA)includes only the United States and Canada.

Question 15

According to Adam Smith,countries trade when they enjoy a comparative advantage over other countries in the production of a given product.

Question 16

A country enjoys an absolute advantage in the production of a particular good when it can produce it at a lower price than another country.

Question 17

According to Thomas Friedman,individuals looking for jobs now compete with hundreds of other similarly trained applicants,coming from all corners of the world.

Question 18

A company that has to make large capital outlays before starting production will want to export in order to spread its costs over a large number of units produced.

Question 19

World trade in services representf a higher percentage of total world trade than does world trade in merchandise.

Question 20

A country often enjoys a comparative advantage because of the abundance of a particular production factor (land,labor,capital,or entrepreneurship)within its borders.

Question 21

The total value of international trade (2008)in services and merchandise is about

A) $ 20 billion.
B) $ 20 trillion.
C) $ 20 million.
D) $ 20 thousand.
E) None of the above

Question 22

NAFTA is a free-trade agreement between the countries of

A) North Africa.
B) North America.
C) North Atlantic.
D) North Asia.
E) None of the above

Question 23

International trade is still mostly concentrated among the developed countries of the Northern Hemisphere.Which country is the largest exporter of the world?

A) United States
B) Germany
C) China
D) Japan
E) None of the above

Question 24

On occasion,a firm will respond to a competitor's move by retaliating.For example,Linde Gas (an American firm producing industrial gasses)entered the French market when Air Liquide (a French company in the same industry)decided to enter the U.S.market.Such a move is considered a

A) cost driver.
B) competitive driver.
C) technology driver.
D) market driver.
E) None of the above

Question 25

The International Product Life Cycle Theory explains why there are no televisions manufactured in Great Britain and the United States,although that technology was invented in those countries.

Question 26

According to the International Product Life Cycle Theory,the country(ies)most likely to manufacture a product that has been recently developed (one that is the result of a brand-new design and uses patented technology)and is in its first commercialization year,is (are)

A) the country of innovation only.
B) developing countries.
C) any country with the manufacturing technology necessary to manufacture it.
D) other developed countries.
E) None of the above

Question 27

Argentina can produce 1 ton of meat (beef)using 0.1 years of labor.It can also produce 1 automobile using 2 years of labor.In order to produce 1 ton of beef,the United States uses 0.2 years of labor.It can produce an automobile using 1.5 years of labor.Argentina has

A) an absolute advantage in the production of automobiles.
B) an absolute advantage in the production of beef.
C) a comparative advantage in the production of automobiles.
D) a comparative advantage in the production of beef.
E) None of the above

Question 28

Russia can produce 25 tons of steel or 5 automobiles using the same amount of resources.Using the exact same amount of resources,India can produce 18 tons of steel and 3 automobiles.According to the theory of comparative advantage,at what price will Russia and India trade chairs?

A) India will buy automobiles as long as the price is lower than 6 tons of steel
B) India will sell automobiles as long as the price is higher than 5 tons of steel
C) Russia will buy automobiles as long as the price is lower than 6 tons of steel
D) Impossible to determine with the information given
E) None of the above

Question 29

A product is invented in Country X and is first manufactured there.The International Product Life Cycle Theory holds that the product will be manufactured in developing countries within a couple of years.

Question 30

International trade is still mostly concentrated among the developed countries of the Northern Hemisphere.Which country is the largest importer of the world?

A) United States
B) Germany
C) China
D) Japan
E) None of the above

Question 31

A firm can respond to one of its competitors' introduction of a lower-priced product by starting to produce its own lower-cost product abroad and importing it.Such a strategy is called

A) insourcing.
B) foreign investment.
C) just-in-time.
D) outsourcing.
E) None of the above

Question 32

The Heckscher-Ohlin Theory holds that countries that have an abundance of certain resources enjoy an absolute or comparative advantage over other countries.Which of the following is NOT one of the factors that Heckscher and Ohlin considers scarce?

A) land
B) labor
C) capital
D) education
E) None of the above

Question 33

Which of the following entities was created at the Bretton Woods Conference of 1944?

A) International Monetary Fund
B) World Trade Conference
C) Marshall Plan
D) United Nations
E) None of the above

Question 34

Porter's Cluster Theory holds that geographical areas with a large concentration of a certain type of companies allow that area to obtain an absolute or comparative advantage.How do those companies benefit from the presence of other companies like them in the same area?

A) they can attract talented employees
B) such concentration fosters creativity as employees' know-how travels from employer to employer
C) the concentration of talent fosters innovation
D) All of the above
E) None of the above

Question 35

Consumer mobility refers to the idea that consumers like to find the same products everywhere.An example of a company that sells products everywhere in the world because its customers are all over the world is

A) McDonald's Restaurants.
B) Intercontinental Hotels.
C) Fuji Film.
D) All of the above
E) None of the above

Question 36

Michael Porter views Silicon Valley is an example of a "cluster" of innovation and manufacturing.

Question 37

The common currency of most of the countries of the European Union is called

A) the euro-dollar.
B) the european currency unit (ECU).
C) the thaler.
D) the euro.
E) None of the above

Question 38

Until the 1950s,most of the area rugs in the world were manufactured in Persia (Iran)and Pakistan.Artisans in these countries had developed techniques (dyes and knots)that were unique and that other production areas were not capable of reproducing.These areas enjoyed what Michael Porter would call an "absolute advantage."

Question 39

The European Union is an economic community that comprises how many countries?

A) 15
B) 25
C) 18
D) 27
E) None of the above

Question 40

Russia can produce 25 tons of steel or 5 automobiles using the same amount of resources.Using the exact same amount of resources,India can produce 18 tons of steel and 3 automobiles.According to the theory of comparative advantage,the countries will trade with each other.What will Russia produce?

A) steel
B) automobiles
C) some steel and some chairs
D) Impossible to determine with the information given
E) None of the above

Question 41

The ____________________ succeeded the General Agreement on Tariffs and Trade created by the Bretton Woods Conference.

Question 42

Brigham Young University publishes a series of pamphlets that describe the cultural traits of a country particularly clearly and accurately.Such pamphlets are called

A) Culturama.
B) CultureGrams.
C) Country Cultural Guides.
D) World Culture Books.
E) None of the above

Question 43

The ____________________,signed in 1957,led to the creation of the European Union.

Question 44

The Theory of Comparative Advantage was first coined by Robert Torrens,but popularized by ____________________.

Question 45

The General Agreement on Tariffs and Trade was an effort at reducing tariffs and non-tariff trade barriers.These reductions took place through year-long discussions that were called ____________________.

Question 46

When a large retailer asks a company to manufacture a product so that it can be sold at a low(er)price point,the company is often constrained to outsource its production overseas.Such a phenomenon is called the ____________________.

Question 47

An international logistician cannot possibly learn all of the cultural subtleties of a particular country; however,in order to avoid frustrations and difficulties,it would be advisable that s/he study

A) sociology.
B) anthropology.
C) intercultural communication.
D) psychology.
E) None of the above

Question 48

The international environment presents challenges for the international logistician.Which aspect of the international business environment is most likely to create frustrations?

A) cultural differences
B) economic issues
C) currency differences
D) infrastructure constraints
E) None of the above

Question 49

The Theory of Absolute Advantage was first coined by ____________________.

Question 50

Information on foreign countries,including their economic environment,their political environment,and their geography,can easily be found in several publications.Which is NOT one of the organizations that publishes background information on countries?

A) The Economist's Intelligence Unit
B) The Central Intelligence Agency
C) The U.S. Department of Commerce
D) The United Nations' UNICEF
E) None of the above

Question 51

The International Product Life Cycle Theory was developed by ____________________.

Question 52

The euro is the currency of ____________________ of the twenty-seven countries of the European Union.

Question 53

The Heckscher-Ohlin Theory can also be called the ____________________.

Question 54

In 1995,the World Trade Organization succeeded the ____________________ that had been created at the Bretton Woods Conference in 1944.

Question 55

The concept that encompasses the heritage of a country's population,including their language,their customs,their traditions,their morals,and their beliefs is that country's ____________________.

Question 56

The Cluster Theory,developed by Michael Porter,argues that geographic areas benefit from having a high concentration of companies in a particular industry.The area of Sassuolo,in Italy,has a high concentration of ____________________ companies.